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10 Superannuation

Contributing to Superannuation

There are a number of ways that the Australian Government encourages us to save for retirement:

  • For most employees their employer is required to contribute 9.5% equivalent of their salary each year as a mandatory Super Guarantee contribution (this is gradually increasing to 10% in 2021/22, with 0.5% increases each financial year thereafter until it reaches 12% in 2025/26);
  • Individuals may be able to arrange with their employers to salary sacrifice further contributions into their super fund;
  • Individuals may be eligible to make additional voluntary personal contributions to their super fund and claim a tax deduction;
  • Individuals may be eligible to receive a government co-contribution when they make after-tax personal contributions to superannuation;
  • Contributions can be made by a spouse, for which the contributing spouse may be eligible for a tax offset;
  • Investment earnings and contributions eligible for a tax deduction (both employer super contributions and voluntary personal super contributions) are taxed at a contributions tax rate of 15% when received by the super fund and forwarded to the ATO, which may be lower than the individual's marginal tax rate.
  • Contributions tax increases to 30% for those individuals with incomes over $250,000; and
  • Individuals with low levels of income may have tax on superannuation contributions refunded.

Remember, your superannuation is intended to be there for your retirement. If you do contribute additional money to superannuation, it is important to expect that this money will need to remain in the superannuation fund environment until you satisfy one of the conditions of release, such as turning 65 years of age.

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